BG, which was split off from the British Gas trading arm Centrica a year ago, said operating profits dipped by 6 per cent to pounds 552m in the January- March period.
Transco, its pipeline arm, also felt the effects of the 13 per cent price cut imposed by the regulator Ofgas the previous autumn. This sliced pounds 140m from profits but BG said the reduction was partially offset by a pounds 45m fall in depreciation charges and pounds 57m of cost savings.
Staff levels at Transco fell by 432 to 15,452 at the end of March. Overall Transco's operating profits fell by pounds 62m to pounds 465m.
However, BG's exploration and production business made a strong contribution, posting a 57 per cent increase in operating profits to pounds 63m on the back of a 48 per cent rise in production volumes.
Despite a near 20 per cent fall in oil and gas prices on the previous year, operating profit per barrel was up by 6 per cent as BG's drive to cut production costs began to pay dividends.
The warm weather in February, when temperatures rose into the mid 60s Fahrenheit, took its toll on domestic gas consumption. But the actual volume of gas transported during the quarter was the same as 1997 because of the increased demand from large industrial users.